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The price of cryptocurrencies can be influenced by government actions in a number of ways.
First, governments may influence the value of assets such as fiat currencies by purchasing and selling in international markets.
Moreover, by saddling an asset class with rules that raise the cost of conducting business, they might dampen undue excitement for it.
One example of this method is bitcoin regulation, which is being examined in several states around the United States and also in the rest of the world.
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For bitcoin traders inside their territories, most states demand surety bonds or an equal amount in fiat money. Furthermore, governments can make an object scarce by placing restrictions on it.
In the case of bitcoin and cryptocurrencies, all three sorts of activities have the potential to fail.
This is because cryptocurrencies are extra-national in nature, with decentralized ledgers distributed across several nations.
Their regulation will need a well-coordinated effort from several economies. Given the various degrees of interest in cryptocurrencies and their influence on national economies throughout the world, this may be a challenging assignment.
The issue with controlling Bitcoin and other currencies is that they operate on a peer to peer network.
While administrations have been successful in controlling sites such as The Pirate Bay and Silk Road, there is an overwhelming number of cryptocurrencies.
The key distinction with cryptocurrencies is that trades may be carried out through platforms or directly through your coin wallet.
Imposing Sanctions on cryptocurrency
The most obvious approach for the government to control cryptocurrencies is to excise any fiat money used to cash out a digital asset.
The biggest drawback is that this would have to apply to specific tokens, and a cryptocurrency holder could just switch to another coin to payout.
Aside from that, many early investors and theocrats favor cryptocurrencies to conventional fiat currency as a means of exchange for fundamental goods and services.
Currently, cryptocurrencies are subject to the SEC's responsibility for investments, the CTFC's authority for any offenses involving interstate commerce, and the IRS's jurisdiction with either income or capital gains tax.
The SEC just authorized two Bitcoin futures ETFs, one through the CBOE and one through the CME. Despite the fact that several applications have been received, no further futures ETFs have been authorized at this time.
Much of the suggested restrictions being considered throughout the world are based on concerns about a hazardous speculative bubble that many believe could hurt the country if bitcoin prices fall.
The Benefits and Drawbacks of Decentralized Cryptocurrency
These decentralized exchanges offer users a platform to buy and sell cryptocurrencies, but they are not run by a single regulating body and instead serve as a decentralized trading platform.
Although these efforts address the issue of centralization, they have their own set of issues that hinder them from becoming widely adopted.
Exchanges that function in this manner protect their users' privacy and anonymity by never needing personal data or information.
While centralized exchanges demand the provision of personal information such as name, address, government-issued ID, and other details, decentralized exchanges allow tokens to be freely exchanged, avoiding the danger of government interference or censorship.
Despite all of the advantages of decentralized exchanges, they have yet to create a user-friendly experience for new consumers.
There are several forms of decentralized exchanges now available, but each has drawbacks that must be addressed. Irrespective of the sort of decentralized exchange, virtually all of these choices have one thing in common: they cannot provide a simple and rapid exchange from fiat to bitcoin.
Users of Coinbase and other renowned centralized exchanges find it straightforward to switch from a credit card, bank account, or other payment method to bitcoin in a matter of a few seconds.
New decentralized exchanges are appearing with increasing frequency. All offer a solution to these problems of centralization and offer their own perspectives on how to address the other difficulties that exist with current decentralized systems.
However, unless usability and liquidity concerns are overcome, it is doubtful that any decentralized cryptocurrency exchange can attain widespread use.
The bulk of bitcoin consumers will go toward centralized exchanges as long as they provide easy to use and quicker trading.
There is certainly much opportunity for development, but it remains to be seen if any decentralized exchange would provide all of the tools and capabilities required to service the whole sector.
Moreover, many traders and investors use platforms, like Bitql, who act as a reliable trading bot for its consumers.
These platforms use automated software that are supported by artificial intelligence which helps the platform to correctly predict the trends of the crypto market.
These easy to use platforms add onto the feasibility of the users, and help newcomers in the field to develop a better understanding of the market at minimal risk.
Even the experts can conduct more reliable trades through the services of these platforms. Such trading platforms are also expected to play a crucial role in the blockchain and crypto realm in coming times, mainly because of the increasing scope of this industry.
This is why many regional governments and authorities are deeply invested to explore the ecosystem and role of these platforms.